Turns out both Republican Rep. Bill Sali and his Democratic congressional challenger Walt Minnick agree on one thing: The proposed Congressional bailout of the faltering economy was a bad idea. The two political competitors just have very different reasons.
Sali joined the majority of the House of Representatives on Monday, Sept. 29 when he voted against the proposed $700-billon bailout plan—a decision that sent the Dow Jones spiraling downward in its worst single-day loss in history.
For Sali, the issue is putting the burden on taxpayers. Instead of having the government buy up the bad investments slogging the national and global credit system, he is in favor of providing tax incentives to encourage private industry to do it instead.
“We need a solution that does not jeopardize taxpayers and does not fundamentally change the relationship [between government and business],” said Sali’s spokesperson Wayne Hoffman.
Sali is part of a bipartisan coalition working on its own plan. Among the possibilities is eliminating or reducing taxes on private investors willing to buy bad investments.
Hoffman said the coalition is also looking at ways to modify fair-value accounting, but said the details of that option are still being worked through.
“There’s a lot of really fresh ideas out there that weren’t considered before, that need to be considered,” Hoffman said.
And while Minnick agrees that the proposal before congress was a poor one, he still believes that the government needs to step in to protect the integrity of markets both in the United States and around the world. The key to that, is providing liquidity, allowing financial institutions to continue the lending cycle, Minnick said.
But rather than a pay-out, Minnick supports short-term loans “not taking bad assets off of questionable banks.”
If the loans aren’t repaid on time, he feels the corporations should be treated like everyone else, and the loan should be foreclosed. He also strongly believes that the CEOs of companies that opt for governmental help should not receive any financial benefit.
“If the taxpayers were going to be asked to step in and help, the CEOs shouldn’t have a plug nickle in termination pay,” Minnick said. “There’s no termination pay for a CEO who has ruined the company.”
Minnick, two large companies, including serving as CEO of Trus Joist, said he would never have expected to benefit if he had ruined one of his companies.
“If I had ruined my company, the board would make sure I was ousted on my ear,” he said.
Adding larger regulatory reform is also imperative to any plan, Minnick said. Among his suggestions is consolidating the number of agencies which have oversight of the financial industry and making sure every aspect of the industry has some federal regulation.
“It’s very hard to get regulatory reform through Congress,” he said. “If you miss this train out of the station, it’s going to be very hard to get it through later.”
Minnick said Sali’s idea of tax incentives for private industry “sounds like nonsense” and doesn’t address the current issue. “We need to keep the banking industry functioning,” he said.
Both Minnick and Sali agree that something needs to happen soon. Hoffman said Sali and other coalition members are working as fast as they can and will hopefully have a new proposal available to the public soon.
Minnick believes time is imperative to stopping the situation from getting any worse.
“We are in a recession,” he said. “We need to act quickly [to] prevent a global depression.”